How Stage 2 Rental Law Reform Affects Property Investors

  • How Stage 2 Rental Law Reform Affects Property Investors

If you own investment properties in Queensland, or are thinking of purchasing there, you may have been following the state government’s attempts to deal with soaring rental prices and shrinking vacancy rates.

First, premier Annastasia Palaszczyuk’s government announced it intended to charge investors land tax based on the total size of their portfolio, even if a lot of the properties weren’t in Queensland. That initiative was met with such backlash, that the idea was soon scrapped.

The Qld government then turned its attention to placing caps on rent rises by landlords.

There was some concern that these measures would be unfair on landlords, many of whom were simply passing on the cost of higher mortgage repayments that they needed to make on the back of a year of RBA rate hikes.

However, the Qld government insisted its plan would be fair for tenants and landlords.

The result was the recently passed Stage 2 Rental Law Reforms.

Let’s take a detailed look

The main part of the new reforms, which will come into play from July 2023, will be the capping of rental increases to one per year.

The government says this will improve stability for households dealing with a tough cost of living environment and uncertainty around their living situation.

While this rule takes effect, the government is also seeking feedback from the community on a range of other initiatives, through an options paper which has been released.

Priority issues

The options paper outlines 5 key issues for discussion.

  1. Installing modifications- To make it easier for renters to install safety, security and accessibility modifications in rental properties
  2. Minor personalisation changes- To help renters and landlords agree on minor changes that tenants might make to properties to make them feel more like a home such as hanging pictures, or planting gardens.
  3. Balancing privacy and access- To balance renters’ rights to privacy with owners need for investment information. This may include putting more structure around how often owners can access a property, plus the access and storing of a tenants’ personal information.
  4. Improving rental bond process- To ensure rental bond settings provide appropriate security and parties are transparent and accountable for their bond claims. Here, tenants may be enabled to challenge claims against bond more readily.
  5. Fairer fees and charges- Ensure rent payment, utility and reletting fees and charges are fair and reasonable.

So what does it all mean for investors?

Right now, the impacts for most investors should be minimal. It is rare for a landlord to raise rents more than once a year as most will have tenants on a lease.

Investors will still be able to increase rents every 12 months to achieve the market rate for their rental return.

Future impacts are a case of “let’s wait and see”. But looking at the 5 key issues above, there doesn’t appear to be anything there to undo a good deal in the Qld market.

Most of the issues are around proper structuring of inspections, plus transparency around bond claims and so on. The parts about installing modifications and personalising rental homes are largely bringing Qld into line with what other states are already doing. Values of properties, rental yields and future growth are unlikely to be affected.

Stick to the fundamentals

Nothing about the Stage 2 reforms affects the fundamentals of property investing. If the numbers stack up, there is value to be found. And investors should want tenants to feel comfortable, as when it all comes down to it, landlords and tenants both need each other.



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